What is a SIP? How to Invest in Mutual Funds via SIP?

SIP or Systematic Investment Plan is a method of investing a fixed sum every month in a mutual fund scheme. You can choose between different equity and debt funds. SIP allows you to buy units regularly on a fixed date.

This long-term systematic investment plan can provide higher returns and minimize risk as well. Investing in a mutual fund SIP is a smart way to channelize your savings to create long-term wealth. You can invest your hard-earned money in a planned and systematic manner with SIPs.

What Makes SIP the Best Way to Invest in Mutual Funds?

Investing through a SIP comes with a number of benefits:

· Power of compounding: With a SIP, you invest a small amount regularly for a long-term, starting at an early age. This gives you the benefit of compounding and creates wealth.

· Rupee cost averaging: By investing a fixed amount of money consistently for a long time, you get a lower average cost.

· Easy to invest: Investment in a SIP can be done easily over a few mouse clicks. It doesn’t have a complicated process.

· Small capital: You don’t need big money to invest in a SIP. It can start with as low as INR 500 per month.

How to Invest in Mutual Funds via SIP?

Before starting any investment, you should consider listing down your dreams. Then set realistic financial goals and work out a plan to achieve them.

Once you’ve figured out your SIP goals, it becomes easier for you to choose the right funds.

However, investing in a SIP requires you to complete your KYC (Know Your Customer). For this, you need to submit your identity proof and address proof and get your IPV (In-Person Verification) done.

Identify the schemes in which you would like to invest. These might include equity funds, debt funds, and tax-saving funds. You should diversify your investments through multiple SIPs in different schemes to optimize returns and minimize risks.

Experts recommend you to invest for a long-term to enjoy the twin benefits of the power of compounding and rupee-cost averaging by working through different market cycles.

Complete the formalities for SIP investment including forms and cheques. And start investing in the mutual fund SIP of your choice.

Final Thoughts

Enjoy the benefits of investing in a SIP to grow your funds. Have you ever invested in mutual fund SIPs? Please share your experience with us in the comments below.